Business: Shares

Cautious consumers are not persuaded that recession is over

ACCORDING to official figures, recession is behind us, but it seems that the average UK consumer may take a little more persuasion than the gospel according to the Office of National Statistics to part with their hard-earned cash.

Yesterday, the British Retail Consortium (BRC) said October’s UK retail sales, down 0.1 per cent year on year, were the worst outside a seasonal period for 11 months, ending hopes that September’s more buoyant results would spark a retail revival on the run-up to Christmas.

Online sales did not escape the slump, with the BRC saying that the past three months include the two weakest growth rates of the past four years.

BRC director Stephen Robertson said it looked like the modest sales revival seen in September was something of a false dawn.

“The disappointing figures are a reminder of the difficult economic realities many are still facing.

“Falling consumer confidence means people are limiting spending to essential items and are cautious about committing to big-ticket and discretionary buying.

“The recession may be officially over, but it will take a little longer for consumers to feel they can spend freely again. Retailers are holding less stock than a year ago and may choose to be cautious with pre-Christmas sales in order to protect margins.”

The general retail trend was echoed by Marks & Spencer, which reported falling halfyear profits yesterday as it counted the cost of its worst non-food sales performance for three years.

The retailer posted a fall in underlying pre-tax profits to £297m, from £307m a year earlier, after admitting to mistakes in its core womenswear range.

Under-pressure chief executive Marc Bolland offered signs of a turnaround since then, reporting a better-thanfeared 1.8 per cent fall in likefor- like non-food sales in the second quarter – a marked improvement on the 6.8 per cent slide seen in the first three months, which marked its worst performance since December 2008.

M&S said it had taken decisive action by improving buying and merchandising, while also overhauling its general merchandise team and hiring new managers – including former Debenhams and Jaeger boss Belinda Earl in the newly-created role of style director.

It was a different story at Primark, which has continued to resist Europe’s economic woes after an “exceptional”

year in which it racked up £3.5bn in sales and created 10,000 jobs.

The budget chain, which has 158 of its 244 stores in the UK, grew operating profits by 15 per cent to £356m in the year to September 15, parent company Associated British Foods said yesterday.